RBI told banks and other regulated entities to ensure a complete transition away from the London Interbank Offered Rate (LIBOR) from July 1. The central bank advised banks and financial institutions not to do new LIBOR-linked or the Mumbai Interbank Forward Outright Rate (MIFOR)-linked financial deals.

Ø  RBI has asked banks and financial institutions to adopt by July 1 a widely accepted Alternative

Ø  Reference Rate, such as the Secured Overnight Financing Rate (SOFR).

Ø  Banking entities in India have been told to complete the transition from the scandal-hit LIBOR

Ø  and Mumbai Interbank Forward Outright Rate (MIFOR).

Ø  MIFOR is the rate that Indian banks use as a benchmark for setting prices on forward-rate agreements and derivatives.

Ø  MIFOR is a mix of the London Interbank Offered Rate and a forward premium derived from Indian forex markets.

What is London Interbank Offered Rate (LIBOR)?

Ø  LIBOR is a widely used benchmark interest rate that is used to determine the cost of borrowing for many financial instruments, including loans, mortgages, and derivatives.

Ø  It is the average interest rate at which major banks in London are willing to borrow funds from each other in the interbank market.

Ø  Banks and private companies were using LIBOR as the benchmark rate for raising funds abroad.

Libor is calculated daily for —

Ø  five currencies — UK Pound Sterling, the Swiss Franc, the Euro, Japanese Yen and the U.S. Dollar; and

Ø  seven maturities (overnight, one week, one month, two months, three months, six months, and twelve months).

Published by —

Ø  LIBOR is published by the Intercontinental Exchange (ICE) and is based on submissions from a panel of major banks.

Ø  The ICE is an American company that owns and operates financial and commodity marketplaces and exchanges.

Ø  It was founded in May 2000 in Atlanta, Georgia.

Ø  ICE operations include futures exchanges, cash exchanges, central clearing houses, and market services for off-exchange trading.

How Is Libor calculated?                

Ø  Each day, 18 international banks submit their ideas of the rates they think they would pay if they had to borrow money from another bank on the interbank lending market in London.

Ø  To help guard against extreme highs or lows that might skew the calculation, the ICE strips out the four highest submissions and the four lowest submissions before calculating an average.

Ø  It should be noted that Libor is not set on what banks actually pay to borrow funds from each other.

Ø  Instead, it is based on their submissions related to what they think they would pay.

Ø  As a result, it is possible for banks to submit lower rates and manipulate Libor fairly easily.

Why LIBOR is being phased out?

Susceptibility to manipulation —

Ø  Concerns over its reliability and susceptibility to manipulation

Ø  The benchmark rate was at the centre of a major scandal in 2012 when it was revealed that several banks had colluded to manipulate LIBOR rates for their own benefit.

Ø  Since then, there have been numerous investigations and legal cases related to LIBOR manipulation.

Libor and the 2008 Financial Crisis — LIBOR played a significant role in the 2008 financial crisis, as it was used as a benchmark rate for many financial instruments, including mortgages, loans, and derivatives

Accuracy of LIBOR and its ability to reflect true market conditions —

Ø  The interbank lending market that LIBOR was designed to reflect has become less active  in recent years, and there are fewer transactions on which to base LIBOR calculations.

Ø  This has led to concerns about the accuracy of the benchmark rate and its ability to reflect true market conditions.

Regulators around the world developing new benchmark rates —

Ø  The Secured Overnight Financing Rate (SOFR) is the main replacement for Libor in the United States. This benchmark is based on the rates U.S. financial institutions pay each other for overnight loans.

Ø  In the UK, the Sterling Overnight Index Average (SONIA) is replacing LIBOR. This is based on actual transactions in the overnight unsecured lending market.

The Union government has announced that it has prepared a Model Prisons Act to replace the current 130-year-old law i.e., Prisons Act, 1894. This is done in order to shift the focus of incarceration from retributive deterrence to reform and rehabilitation.

About Prisons Act, 1894 and the Need for a new Law -

Ø  The present ‘Prisons Act, 1894’ is a pre-independence era Act and is almost 130 years old.

Ø  The Act mainly focuses on keeping the criminals in custody and enforcement of discipline and order in prisons.

Ø  There is no provision for reform and rehabilitation of prisoners in the Act.

Ø  In the last few decades, an altogether new perspective has evolved about prisons and prison inmates, globally.

Ø  Prisons today are not looked as places of retributive deterrence but are considered as reformative and correctional institutions where the prisoners are transformed and rehabilitated back into society as law abiding citizens.

Ø  As per the provisions of Constitution of India, ‘prisons’/ ‘persons detained therein’ is a 'State' subject.

Ø  The responsibility of prison management and prisoners’ administration solely vests with State Governments who alone are competent to make appropriate legislative provisions in this regard.

Ø  However, given the critical role that efficient prison management plays in the criminal justice system, the Government of India attaches high degree of importance to supporting the States/ UTs in this regard.

About Model Prisons Act, 2023 -

Ø  A need was felt to revise and upgrade the Act in tune with modern day needs and requirements of prison management.

Ø  Hence, a decision was taken to by the Central government to review and revise colonial-era outdated Prison Act, in tune with contemporary modern day needs and correctional ideology.

Ø  The Ministry of Home Affairs assigned the task of revision of the Prisons Act, 1894 to the Bureau of Police Research and Development.

Ø  The Bureau, after holding wide ranging discussions with State Prison authorities, correctional experts etc. prepared a draft.

Ø  Along with Prisons Act, 1894, ‘The Prisoners Act, 1900’ and ‘The Transfer of Prisoners Act, 1950’ have also been reviewed by the Ministry of Home Affairs and relevant provisions of these Acts have been assimilated in the ‘Model Prisons Act, 2023.’

Ø  State Governments and Union Territory Administrations can benefit from the Model Prisons Act, 2023 by adopting it in their jurisdictions, with such modifications which they may consider necessary, and repeal the existing three Acts in their jurisdictions.

Salient Features of the new Model Prisons Act -

Ø  Provision for security assessment and segregation of prisoners, individual sentence planning.

Ø  Grievance redressal, prison development board, attitudinal change towards prisoners.

Ø  Provision of separate accommodation for women prisoners, transgender, etc.

Ø  Provision for use of technology in prison administration with a view to bring transparency in prison administration.

Ø  Provision for video conferencing with courts, scientific and technological interventions in prisons, etc.

Ø  Provision of punishment for prisoners and jail staff for use of prohibited items like mobile phones etc. in jails.

Ø  Provision regarding establishment and management of high security jail, open jail (open and semi open), etc.

Ø  Provision for protecting the society from the criminal activities of hardened criminals and habitual offenders, etc.

Ø  Provision for legal aid to prisoners, provision of parole, furlough and premature release etc. to incentivise good conduct.

Ø  Focus on vocational training and skill development of prisoners and their reintegration into the society

A team of researchers and history enthusiasts recently made a praiseworthy discovery of relics and artefacts which they suggest belong to the Satavahana period from the 1st Century BC to the 3rd Century AD.

About Satavahana Dynasty -

Ø  The Satavahanas, also referred to as the Andhras in the Puranas, were an ancient Indian dynasty based in the Deccan region.

Ø  Most modern scholars believe that the Satavahana rule began in the late second century BCE

Ø  and lasted until the early third century CE.

Ø  They ruled from Pune in Maharashtra to Coastal Andhra Pradesh. At its greatest extent, the Satavahana empire covered the whole of the Deccan and spread far into Northern India, perhaps even as far as Magadha.

Ø  They played the most significant role in Indian history in the period between the fall of the Mauryas and the rise of the Gupta Empire.

Origin —

Ø  Satavahana Dynasty was established in the 1st century BC in the western Deccan Plateau.

Ø  Satavahana Rulers had emerged from the Andhra region or the delta areas of the Krishna River and Godavari River.

Ø  The dynasty was built upon the ruins of the Mauryan Empire.

Rulers of the Satavahana Dynasty —

Ø  Simuka was the founder of the Satavahana Dynasty, and he is believed to have destroyed the Sunga Power.

Ø  The dynasty reached its zenith under the rule of Gautamiputra Satakarni and his successor Vasisthiputra Pulamavi.

Ø  Gautamiputra Satakarni received wide recognition because of his policy of military expansion.

Ø  Satakarni carried on expansion through the entire country and became famous during that era as a king of great power and valour.

Ø  Capital — The dynasty had different capital cities at different times, including Pratishthana (Paithan) and Amaravati (Dharanikota).

The Decline of the Satavahana Dynasty —

Ø  Till the end of the 2nd century, the Satavahana dynasty expanded from western India to the Krishna delta and northern Tamil Nadu , but this expansion did not continue for long.

Ø  The Satavahanas Dynasty collapsed when Abhiras seized Maharashtra, and Ikshwakus and Pallavas appropriated the eastern province.

Ø  Their greatest competitors were the Sakas, who had established their power in upper Deccan and Western India.

Ø  The kingdom had fragmented into smaller states by the early 3rd century CE.

Administration —

Ø  The Satavahana polity was extensively decentralised, as local administration was left largely to feudatories subject to the general control of royal officials.

Ø  The king was at the apex of the administrative hierarchy and was considered the guardian of the established social order.

Ø  Though the royal power was absolute, it was subject to religious dictates & public opinion.

Ø  The king had to rule in accordance with the rules laid down in the Dharmashastras.

Ø  The ruler appointed several ministers & executive officers to assist him in administration.

Ø  The officers in the king’s ministry were called Raj-amateurs.

Religion and Culture —

Ø  The Satavahanas were followers of Hinduism and patronised Maharashtri Prakrit literature.

Ø  They were influenced by the sacrificial tradition of the Vedic religion.

Ø  The Satavahana rulers gave liberal patronage to Buddhism as well. Gautamiputra Satakarni, Pulumavi, Yajna Satakarni & some other kings financed the excavation of caves, stupas, chaityas & viharas in the Deccan.

Ø  They were the first Indian kings to give royal grants of land to those practising Buddhism and Brahmanism.

Other practices —

The most intriguing practice instituted by the Satavahanas was that of metronymics i.e. the name of emperors was often derived from the female lineage.

The Satavahanas were early issuers of Indian state coinage struck with images of their rulers.